General Motors probe finds 'incompetence and neglect'

Automaker fires 15 over ignition switch debacle; current leadership was not implicated in report

An internal investigation by General Motors found "a pattern of incompetence and neglect" in its decadelong failure to recall millions of defective small cars but concluded that there was no deliberate cover-up, the company's chief executive said Thursday.

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By BILL VLASIC

capecodtimes.com

By BILL VLASIC

Posted Jun. 6, 2014 at 2:00 AM

By BILL VLASIC
Posted Jun. 6, 2014 at 2:00 AM

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WARREN, Mich. — An internal investigation by General Motors found "a pattern of incompetence and neglect" in its decadelong failure to recall millions of defective small cars but concluded that there was no deliberate cover-up, the company's chief executive said Thursday.

Mary T. Barra, the chief executive, said 15 employees had been dismissed, most in senior and executive roles, and five others had been disciplined. But despite the broad findings, the report did not tie Barra and her top lieutenants to the recall delay that GM has linked to 13 deaths and 47 crashes.

"Repeatedly, individuals failed to disclose critical pieces of information that could have fundamentally changed the lives of those impacted by a faulty ignition switch," she said. "If this information had been disclosed, I believe in my heart the company would have dealt with this matter appropriately."

She did not say who the discharged employees were, nor which departments they worked in. She said only that "more than 50 percent" were executives, and that two who had been suspended were dismissed. In April, two midlevel engineers, Raymond DeGiorgio and his supervisor, Gary Altman, were placed on paid leave. Both had been deposed last year in a lawsuit filed against GM by the family of a Georgia woman who died in a Cobalt crash in 2010.

The report, which was being given to federal regulators and Congress on Thursday, was the result of an investigation overseen by Anton R. Valukas, a former U.S. attorney. Saying that Valukas had "complete independence" to conduct his inquiry, Barra said that it included more than 350 interviews with more than 230 people, and a review of millions of documents.

Outlining the findings, Barra painted a picture of a company where employees failed to act on knowledge that they knew to pose a danger.

"Numerous individuals did not accept any responsibility to drive our organization to understand what was truly happening," she said. "The report highlights a company that operated in silos, with a number of individuals seemingly looking for reasons not to act, instead of finding ways to protect our customers."

She said that the failure to act continued up to the decision on Jan. 31 to begin the recall, which would increase to nearly 2.6 million cars.

"Throughout the entire 11-year history, there was no demonstrated sense of urgency, right to the very end," she said.

But despite the failures, she said the report found no institutional effort to cover up the problems, an allegation she faced in pointed questioning before congressional lawmakers.

"Mr. Valukas' report revealed no conspiracy by the corporation to cover up the facts," she said. "In addition, the investigators found no evidence that any employee made a trade-off between safety and cost."

She repeated that GM had undertaken a series of initiatives to improve its safety practices and quality control, including the appointment of a new vice president for safety, Jeff Boyer.

She also announced that GM would put in place a long-awaited compensation program for victims, to begin on Aug. 1, administered by Kenneth Feinberg, a lawyer who specializes in compensation programs. The details, she said, are to be completed in the coming weeks.

"We are taking responsibility for what has happened by taking steps to treat these victims and their families with compassion, decency and fairness," Barra said. "We made serious mistakes in the past and as a result we're making significant changes in our company to ensure they never happen again."

Feinberg, in a statement, said the compensation program was still being developed.

"I will be spending the next few weeks seeking advice and input from all interested parties as to the terms and conditions of such a program," he said. "I have already drafted some preliminary compensation ideas and plan to share them in confidence over the next few weeks with lawyers, public interest groups, GM and others interested in the compensation program."

The release of the internal investigative report was expected to be a turning point in a safety crisis that has consumed General Motors since Feb. 14, when the automaker began a broad recall of millions of small cars equipped with defective ignition switches.

The automaker has said the number of fatalities and crashes linked to the defect could increase as it gathers more information. But the recall was just the beginning of an escalating series of safety actions at GM, including dozens of subsequent recalls of other vehicles.

General Motors has also come under intense scrutiny for how and why it failed to repair a defect that existed in its cars for more than a decade.

Barra has consistently maintained that she and other senior executives first learned of the switch problems on Jan. 31 — the day that an internal safety committee ordered the initial recall.

"We will hold ourselves accountable," Barra told employees in a March 4 email, her first public comments on the issue.

Six days later, GM hired Valukas, chairman of the law firm Jenner & Block, to investigate the long-delayed recall.

Before Thursday, four senior executives had already left since the recall.

But Barra steadfastly refused to answer detailed questions about events leading up to the recall — including during her testimony at two contentious congressional hearings in April — until Valukas completed his report.

Jenner & Block has long had ties with the automaker. In addition to performing securities work for the company, one of Jenner & Block's lawyers, Robert S. Osborne, was GM's general counsel from 2006 to 2009, years that the ignition switch problem festered within GM. And before that, Osborne was a senior partner at Jenner & Block.

The other firm involved in the internal investigation, King & Spalding, defended GM in a wrongful-death lawsuit filed by the family of Brooke Melton, a case that brought the ignition switch defect to light last year.